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My APR just got increased by 270 percent

Discussion in 'Anything goes' started by Simon_Cowbell, Feb 21, 2010.

  1. Simon_Cowbell

    Simon_Cowbell Active Member

    From 7.99 to 29.4. From one statement to the next.

    No, I was not late with a payment in the interim.

    Do I have any legal recourse?

    How is this not de facto loan sharking?

    I just got a lot of primal screaming out of my system over the phone, but, seriously, other than paying someone $200 or so to transfer the balance to a moderately better rate, what recourse do I have?
  2. TrooperBari

    TrooperBari Active Member

    Have you called the company you're with and demanded an explanation? Doing something like that without informing customers beforehand hardly sounds like good business practices.
  3. The Big Ragu

    The Big Ragu Moderator Staff Member

    No legal recourse. You have a choice. Keep the card and use it. Or don't use it. Or get rid of it.

    Thank your Congress, in large part. They rode populist pablum into policy because the credit card industry became the boogy man of the day a while back. They then regulated the credit card issuers with a bunch of regulations that I believe take effect in a day or two. They are going to hit the card issuers with serious loss of revenue. And it comes at a time when many of those issuers are barely hanging on because of the hit they have taken from the bad economy.

    The regulations are mostly going to make securing credit impossible for anyone with modest income. And the regulations are going to cause significant loss of income for the issuers that they have to make up some way to stay profitable. So a lot of issuers now adding annual fees to cards that never had them. They are lowering credit lines to manage their risk of defaults because the regulations will give them less recourse. They have tightened up credit and don't issue cards to a lot of people who formerly had no problem securing credit lines. And what you are seeing: most are trying to do things to get rid of "unprofitable" customers -- i.e. the ones who take advantage of low rates or pay off their cards on time. You hurt them. Rates have been increasing slowly over the last 18 months in preparation for the new regulations. They had no choice, if they want to stay in business. This WSJ article says some people may see rates upwards of 30 percent this year. Also, the Fed has interest rates so artificially low right now. When and if the prime rate increases, all those cards tied to the prime are going to see ridiculously exorbitant rates.

    It's not lone sharking, though. There is no right to cheap credit and there is no one forcing anyone to take out a loan with terms they think are unfair. The industry would have found a nice equilibrium point between rates and terms on its own, but thanks to our politicians fucking things up for an industry through regulation again we are seeing some very drastic changes all once.

  4. forever_town

    forever_town Well-Known Member

    Your choice is simple. Get out the scissors.
  5. schiezainc

    schiezainc Well-Known Member

    Did they add an annual fee? If not, call them and tell them you're going to keep the card open but not use it until you find another company that will give you the same credit line with a better APR, this way your credit score doesn't take a hit.

    Telling them they've effectively lost your business will make them either A.) Fix it or B.) show you they really don't give a shit and justify your leaving them for greener pastures.
  6. spup1122

    spup1122 New Member

    The same thing happened to most Citi customers a few months ago.

  7. spup1122

    spup1122 New Member

    Also, I very much doubt this occurred without Simon receiving some sort of notice. Even before the new laws, credit card companies informed consumers before a rate increase, and the letter would have mentioned the option of opting out of the new terms and conditions. He likely received some sort of letter and just didn't read it.

    Either that, or he missed a payment. In which case, no notice was needed.
  8. deskslave

    deskslave Active Member

    Yeah, there's not a damn thing you can do about it. If you stop using the card, it's no significant loss to them. You're just one drop in an ocean.

    Hate to be so defeatist, but that's just the reality.

    As an added bonus, if your card is issued by a bank that was bailed out, they're basically charging you 29.9 percent interest to loan you your own money.
  9. WriteThinking

    WriteThinking Well-Known Member

    And if you do have any kind of a significant balance on your cards, that you are unable to pay off in its entirety each month, be prepared to be paying out most of your income, literally, to the credit card companies.

    People will not be able to do it, long-term, and then our economy will really be destroyed, not to mention many more lives will be made miserable.
  10. NoOneLikesUs

    NoOneLikesUs Active Member

    Really dude? REALLY?
  11. WriteThinking

    WriteThinking Well-Known Member

    If only this situation were as easy to solve as just getting out the scissors.

    I agree with Ragu.

    This scenario will have people breaking into their retirement accounts -- no matter the penalties for early withdrawal -- just to get their damn credit cards paid off so that they can rip 'em up.

    Even though people are responsible for their cards, and, of course, shouldn't run them up, these companies know that that happens for a reason, and it's not always because somebody is not caring about being irresponsible.

    And credit card companies take advantage of it the worst just when people are least able to handle it, despite the fact that the companies would certainly make a profit, anyway, even with lesser fees, APR's and interest rates. It really is criminal.
  12. deskslave

    deskslave Active Member

    The economy -- and not just the American economy, though it's certainly one of the worst offenders -- is fundamentally dependent on people spending money they don't have. If people, en masse, ever start not doing that, the whole landscape is going to change.

    It's one of those things where long-term, we'd be better off. But in the short term, with millions of people losing sales jobs and cashier jobs and serving jobs at high-end restaurants, etc., etc., it would be utter chaos.
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